Today’s analysis offers a comprehensive overview of the gold and silver markets, highlighting the key fundamental and technical factors shaping current trends. Our report is designed to provide investors with the insights necessary to make informed decisions and navigate these markets with confidence.
Fundamental Analysis
Spot Gold is facing pressure near a fresh weekly low around $3,330, largely driven by renewed demand for the US Dollar. Recent inflation data from the United States has caused market volatility, especially after the surprising Producer Price Index (PPI) report. Following a relatively mild Consumer Price Index (CPI) reading for July, the PPI for the same period came in much hotter than expected, revealing an annualised inflation rate of 3.3%. The core PPI also printed at 3.7%, far exceeding June’s 2.6% and the anticipated 2.9%.
These inflationary figures have dampened expectations for an imminent interest rate cut in September. However, the possibility of a rate reduction still remains. According to the FedWatch Tool, there is a 90.4% chance of a 25 basis point rate cut in September, down slightly from the 94.3% probability before the PPI release.
Gold Technical Analysis
Looking at the daily chart for XAU/USD, gold has been trading within a narrow intraday range, just below a flat 20-period Moving Average, which is acting as dynamic resistance. The 100-period Simple Moving Average (SMA) continues to trend upwards, but with diminishing momentum. Technical indicators are currently neutral, with the Relative Strength Index (RSI) slightly declining, aligning with the overall weakness in the market.
On the 4-hour chart, the near-term outlook leans towards the downside. The XAU/USD pair is trading below both the 100 and 200-period Moving Averages, which are showing a lack of clear direction. Technical indicators remain flat but are still within negative territory, suggesting that any recent bounce is unlikely to lead to significant recovery. The Stochastic Oscillator stands at 53, while the RSI is at 48, both indicating a neutral to bearish sentiment in the short term.